How HCL billionaire Shiv Nadar's creative philanthropy is working at bottom of pyramid

ET Bureau|

Updated: Dec 28, 2012, 08.27 AM IST

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How HCL billionaire Shiv Nadar’s creative philanthropy is working at bottom of pyramid

One of Shiv Nadar's favourite phrases is, "If you build it, they will come," a variation on Kevin Costner's line, "If you build it, he will come" , from the 1989 American fantasy drama Field of Dreams. A die-hard movie buff, Nadar boasts a collection of 4,000 films but this one is clearly his favourite. It has a young Costner landing up in the corn fields of Iowa and dreaming up a baseball turf in the middle of nowhere with the best team ever. People thought he was hallucinating but as the film progresses , the dream sequence becomes real.

Let There Be Light

Nadar too dreamt of giving back to society in 1994 when he set up the SSN Trust in the memory of his father , Sivasubramaniya Nadar. He had just closed a deal with Hewlett-Packard wherein the American company invested in a 26% stake in HCL. That gave the then 40-something Nadar a Rs 25 crore bank balance . Nadar was planning to plough the proceeds back to business. That's when his mother's comment hit his conscience.

"She said I must give back to PSG College where I studied, since I was a product of that education ," says Nadar, wrapped in a white shawl on a cold wintry morning in a classroom of one of the VidyaGyan schools he has set up in Bulandshahr, 70 kilometres east of Delhi.

And give back, he did. Since inception, Nadar has pumped in Rs 1,800 crore to his trust, which was repositioned as Shiv Nadar Foundation in 2006. Today, the foundation spans four SSN Institutions in Tamil Nadu, two VidyaGyan schools that hone leadership skills of rural underprivileged children in Uttar Pradesh, a state-of-the-art research-oriented Shiv Nadar University in Dadri, western UP, a museum of art and two Shiv Nadar Schools.

"A lot of people have done work in philanthropy after having made significant amounts of money but he was thinking of giving back at a very early stage," says Nikhil Sinha, a former entrepreneur and venture capitalist who has taken charge as the vice chairman of Shiv Nadar University.

Philosophy Of Philanthropy

In 2010, Nadar pledged a billion dollars for the cause of education over a five-year time-frame . For the 67-yearold philanthropist, that five-year period holds the key. "Supposing I write out a cheque for a billion dollars to the foundation, does it mean anything? There must be evidence of philanthropy. Otherwise, I'm sitting with that money, earning interest exactly the way in my holding company," he says.

There are two types of philanthropy: corrective and creative. While corrective philanthropy relies on picking up a human suffering and solving it in the philanthropist's lifetime, the creative aspect of giving actually creates institutions that stand the test of time. Nadar's long-term vision of creating self-sustaining institutions falls in the domain of creative philanthropy .

"Bill Gates and Warren Buffet haves picked up a problem that should be solved in their lifetime. It has its own self-destruct date and dissolves itself 10 years after both Bill and Melinda Gates pass away," says Nadar, on corrective philanthropy. Meanwhile, the institutions carved out by the Carnegies and Rockefellers that have survived for generations, come under the realm of creative philanthropy. "We're setting up things that will last and they are certainly not programme-oriented ," says Nadar.

The Backbone

In establishing such institutions, Nadar seems to be following what he does best — being hands-on at the onset and then gradually handing things over to professionals , while remaining the guardian angel. At HCL, too, he is now more of a mentor as the two companies are managed by professional CEOs. The proof lies in the structure of five institutions that the foundation has spawned. Each of them has an independent board and there is no interference from the Nadar family in their affairs. For instance, the campus hiring in SSN Institutions is mainly done by Cognizant Technologies and TCS.

Only after the top two hire, do the other IT companies like Infosys and Wipro troop in. HCL too makes a mark in the second or third rung of hirers. "It is vital we don't tinker with it as the board must feel it is growing independently and not being driven by an invisible hand," says Saurav Adhikari, whose day job involves heading strategy for HCL and also doubles up as senior advisor to the foundation.

Nadar takes pride in the fact that all the institutions have structures where his inputs are more in a review format. "I assist them and am part of their creative discussions," he says. "We absolutely disclose every year, thoroughly audited, that no activity is profiteering. And now we will disclose the governance structures as well. We have no compulsion whatsoever to disclose them. But we thought it is just a good practice," says Nadar.

Power Of Practice

Shiv Nadar's journey in philanthropy took off in 1996 when he laid the foundation stone of the SSN College of Engineering in Chennai. "From the beginning, we've been particular that meritorious students shouldn't be deprived of quality education," says Kala Vijayakumar, President, SSN Institutions. Since 1999, SSN alone has disbursed Rs 52 crore worth of scholarships that have benefited over 2,000 first-generation learners. And with its multi-disciplinary approach to education, the institutions have spawned sportsmen of repute.

As Nadar sips his tea in the VidyaGyan classroom at Bulandshahr, he also wears a worried look. "I hope Ashwin survives," he says when prodded. Cricketer Ravichandran Ashwin hails from SSN and was nightwatchman in the final Test of the India-England series at Nagpur the previous day. Like Ashwin, SSN has turned out dozens of sportsmen who represented the country in various disciplines. "We have 14 players who represent India on our campus," says Vijayakumar proudly. "But it's not that these students get poor marks...there's not even one who has got less than 90%," says Nadar.

This financial year, SSN has given scholarships worth Rs 5.5 crore to 560 students. Today, SSN is ranked among the Top 20 engineering institutions in the country and covets the second position in Tamil Nadu after IIT Madras. In 2005, SSN reconstituted its board, including directors from industry and academia . With that, came the mandate of sustainability.

"That's when we looked at endowment from external sources," says Vijayakumar. While SSN is increasing its endowment by about Rs 1.5 crore each year, it has credible names like Redington and CA, apart from a host of NRIs, lined up to back its students through tuition and boarding. Leadership And Diversity

If the emphasis in SSN is on a multi-disciplinary approach and quality education, at VidyaGyan, it is all about leadership. VidyaGyan was set up in 2009 with the broad vision of nurturing leadership from among highly gifted rural poor children in Uttar Pradesh. There are two schools now in UP, in Bulandshahr and Sitapur. A third one is being planned near Varanasi to cover eastern UP.

The concept is a radical one as it handpicks "the top of the bottom of the pyramid" for free tuition and boarding from the fifth grade onward. "VidyaGyan and Shiv Nadar University are pathbreaking because they are exposing people from rural India to leadership positions," says TSR Subramanian, former Cabinet Secretary and Chairman of VidyaGyan.

Half the children CD interacted with at the Bulandshahr campus, spoke chaste English and wanted to join the civil services. Nadar explains the whole concept of VidyaGyan as "spirals of inspiration" . He explains that when a child comes from a small village and a below poverty line family and suddenly goes back and starts talking in English, there is a lot of aspiration.

"First , she affects the family, then she affects the street, then she affects the school and then she affects the village." So when the aspiration level rises, it creates a positively inclined village. That's when VidyaGyan starts making sense since it has the potential to promote further programmes, like adult education and preventive health.

"Now we're considering how to take the follow up programmes," he says. Plans are also afoot to include primary education in the foundation's portfolio. "In the initial stages, language and arithmetic skills are so badly taught that the gap grows. We're hoping to come up with a programme transforming the realm of primary education," says TSR Subramanian. Echoing Nadar, he adds another venture of the foundation in the near future-public healthcare. "We're looking at all the strands of healthcare very closely-pre-primary , primary, secondary and tertiary," he says.

World Is An Oyster

Meanwhile, Nadar and his team of top trustees relentlessly scout for high-quality research-based education the world over. In 2001, Nadar met the Robotics head of Carnegie Mellon University (CMU) Raj Reddy and was highly impressed. Today, Reddy sits on the SSN Advisory Council as CMU has tied up with SSN College of Engineering to award degrees to meritorious students. There are also joint ventures with heavyweight education counters, such as Duke University and University of Pennsylvania's Annenberg School for Communication that Shiv Nadar University has forged over the last year.

In April 2010, Nadar met Yale President Richard C Levin, the man credited to have turned around Yale University, smack in the middle of the once crime-infested , drug-prone neighbourhood of New Haven. Spring was in the air and as he was taking a stroll around the hallowed portals of the institution, he got hooked to the concept of Yale's 'nested community' . He turned around to his lieutenant Saurav Adhikari and said, "This is what we should create." Yale is not a gated community and the university seamlessly flows into the city of New Haven. "So we are now thinking about how our institutions impact the larger community intellectually, and in the larger context, not remain islands of excellence," says Adhikari.

As Nadar could well do a victory lap in his Field of Dreams, he chooses reticence over exuberance. He has not even spent half his committed amount to philanthropy, which he plans to in the next couple of years. By then, he'll be one shy of 70. It has been a long journey for the boy from the coastal village of Moolaipozhi in Tamil Nadu. Each time he went to the temple, he used to take a dip in the sea. And just before taking the dive into philanthropy in the 90s, his mother told him high tide or low, he had to go to the temple. In other words, there was no turning back. He had to dive. "I never second-judged my mother."

Payback Time

Senthil, a product of Shiv Nadar's largesse, is giving back to society what he considers a dream he could not afford

He's 34 and an Associate Project Manager for Cognizant Technologies in Arizona. The money's good and life is easy. Not so a decade-and-a-half ago when R Senthilnathan didn't even have money to burn the proverbial midnight oil. He lost his father at 3 and his mother did odd jobs to raise her only child. Senthilnathan, known to friends as Senthil, fought hard and made it to SSN College of Engineering at Chennai.

He was a day student who doubled up as a night-watchman in a neighbourhood company to pay his college fees. The SSN management got to learn his tale from the class rep and gave him free tuition and boarding.

It's payback time. Today, the successful project manager sponsors the Chellammal Agro Project award (named after his mother ) in his college. He's been giving the Rs 25,000 cash prize to engineering students who submit a project that benefits agriculture industry, directly or indirectly, for the last four years. "Engineering was a dream that I could not afford. SSN helped me realize it. My outlook changed at that very moment and I decided to give back to the community ," says Senthil, his voice half-choking with emotion.

Apart from instituting the award, Senthil also supported a bright spark from a government college after reading about him in a local daily-for four long years, at about Rs 60,000 per year. The beneficiary, Chinnasamy , just completed a year in TCS and has an enviable 4/5 rating. "Earlier , I used to help people I knew. But true philanthropy happens when you don't have a direct relationship with people. My college didn't know me when I enrolled."

Shiv Nadar's inputs are more in the review format . He holds creative discussions with independent boards of the five institutions of the foundation. He is also the Chairman of Shiv Nadar Schools. In 2010, he pledged $1 billion to philanthropy over 5 years. However, his foundation is completely independent of his holding company HCL Corporation and none of its activities can be termed CSR (corporate social responsibility).

Ajay Piramal is known to be personally involved in every cause he supports. His website, however , lists the causes of Piramal Foundation as CSR. Piramal spends Rs 100 crore on welfare projects every year.

For Azim Premji, the Chair of Wipro takes up most of his time. He only works for his foundation on holidays. In December 2010, he allotted 213 million of his personal shares in Wipro to a trust that would fund the work of Azim Premji Foundation. It gets roughly Rs 140 crore a year from the dividends that the shares earn.

The trusteeship principle governing the way the Tata group functions casts the Tatas in a rather unique light: capitalistic by definition but socialistic by character. The various trusts have come to control 66% of shares in Tata Sons, the promoter holding company of the group. The outgoing Chairman of Tata Sons, Ratan Tata, will continue to be Chairman of Tata Trusts. Is expected to bring in rigor and leverage his network of relationships across the world. Expect strategic plans and technological disruptions.